Sunday, January 01, 2006

The Marginalization of Walras

Pop Quiz: Which three economists nearly simultaneously solved the water-diamond paradox by offering the concept of marginalism? Most economists would say Carl Menger, William Stanley Jevons, and Leon Walras, but according to John Kenneth Galbraith that would be wrong. While discussing the growth of consumer demand theory and marginalism as a solution to the water-diamond paradox in his book The Affluent Society, he writes:

Finally, toward the end of the last century -- though it is now recognized that their work had been extensively anticipated -- the three economists of marginal utility (Karl Menger, an Austrian; William Stanley Jevons, an Englishman; and John Bates Clark, an American) produced more or less simultaneously the explanation which, in broad substance, still serves....The larger the stock, the less the satisfactions from an increment.

Thus arrives the Marginalist Revolution, but why is John Bates Clark credited? Todd Bucholz, in New Ideas from Dead Economists, notes the significant role played by Jevons and Menger, as well as their predecessors Thunen and Gossen, in developing marginalism, and he doesn't even mention Clark. Admittedly, that book is more of a casual introduction to economic thought; perhaps other, more distinguished, books offer Clark the designation. Mark Blaug is a very well-respected historian of economic thought, and his book Great Economists before Keynes has garnered much praise from the discipline. Blaug's discussion of Clark does not cite him as a discoverer of marginalism at all. Blaug correctly recognizes Clark's later role in marginal productivity theory but that is a far cry from sharing recognition of the accomplishments of Jevons and Menger. Furthermore, Blaug notes explicitly that Walras was the "co-discoverer of marginal utility theory". Ekelund and Hebert'sA History of Economic Theory and Method mentions Clark very briefly and on only one page in the nearly 600 page book! This was a bit of shock as well, but even after dutiful searching and rereading of the index, that is all I could find of Clark. There was certainly nothing about his role in discovering marginalism, while Jevon's 1874 work is noted as "a seminal work on the marginal-utility theory of value..." Wikipedia also notes that "Walras was one of the three leaders of the marginalist revolution".

I could only find two sources that offered evidence in support of the Clark story. The Wikipedia page for John Bates Clark states that "He was one of the pioneers of the marginalist revolution", but it also says that his contribution to marginal utility theory was only developed "a decade and a half after the simultaneous discovery of this principle by Jevons, Menger, and Walras". The History of Economic Thought Website notes that Clark was "one of the leading figures of the Marginalist Revolution" but then goes on to argue that his main contribution was on the Marginal Productivity Theory of Distribution in 1889. Moreover, their page for Walras recognizes him as "one of the three leaders of the Marginalist Revolution" along with Menger and Jevons.

Why has Walras been marginalized in favor of Clark. Is this just more French bashing and American arrogance? Has Galbraith gotten this wrong too? Clark's contribution to marginalism was not simultaneous with Menger and Jevons; it was almost two decades later and it was a significantly lesser contribution. Considering Clark's rivalry with Veblen (Glabraith's master), it is all the more surprising to see his inclusion. I guess this can be chocked up as just another shortcoming of Galbraith's The Affluent Society.